PIP system in NJ likely to see changes

The New Jersey Department of Banking and Insurance (DOBI) are likely to revise the PIP regulations once again. It has been two years since the earlier reforms made their exit from legal wrangling.

It was during the end of 2009 when the Supreme Court gave an affirmation to the decision taken by the state’s Superior Court’s Appellate Division that the PIP medical fee schedule given by the insurance department was not arbitrary, as the doctors had challenged.

The fee schedules as well as the ongoing battles that followed have been a regular feature in New Jersey for many decades. Now, based on the fresh information that DOBI has gathered, regarding the cost of providing PIP cover, around 3,000 additional codes are being added to the fee schedule.

Marshall McKnight who is the spokesman for DOBI has stated that changes would be required to close the loopholes.

Richard Stokes who is the regional manager as well as the counsel for the Property Casualty Insurers Association of America (PCI) states that the proposal is clearly a reform that is needed right now.

Thomas B. Considine, who is the Insurance Commissioner states that the rising costs in PIP coverage has become a matter of concern for the motorists in New Jersey. Stokes also added that the commissioner was right in wanting to address the underlying issues that were leading to the rise in costs in order to offer coverage to the customers.

According to the earlier fee schedule, medical providers would get reimbursed after treating auto accident victims, but this was before it got embroiled in a legal controversy in August 2007. After this, around 1,000 new codes were added on to bring in some consistency, predictability, and efficiency to the payment systems. Earlier, there were only 100 codes that existed.

The cost of providing insurance coverage under the PIP regulations are driving up private passenger auto insurance rates, states DOBI. The PIP coverage had accounted for almost 97% of rate requests during 2010. Auto insurance companies pay up $1.23 for each dollar they collect, states DOBI.

McKnight goes on to add that they were aware that the last fee schedule was not exactly a panacea. In fact, there were some players who even took advantage by avoiding codes and also using certain procedures that were not coded.

McKnight also added that the arbitration filings had totally spiraled out of control during 2009. There were more than 58,000 arbitration filings that were made, but there were thousands of frivolous ones as well.